Cameron to defend inheritance tax planning

Prime Minister David Cameron will reportedly set out a robust defence of the right of parents to pass money to children today, after a weekend of pressure over his own finances.

Cameron published a statement of his tax affairs since 2010 yesterday, in a bid to draw a line under claims he had profited from investing in an offshore fund run by his late father.

However, he faced renewed criticism over a gift of £200,000 from his mother, which will be exempt from inheritance tax rules if she lives for seven years after the date of the gift.

According to the Telegraph, Cameron will make an urgent statement at the House of Commons today to “utterly” refute claims that the gift constituted tax avoidance, and launch a defence of parents giving their children lump sums without being hit by tax.

A source told the Telegraph the Prime Minister believes it is “completely standard, normal behaviour” for parents to wish to leave tax-free sums to their children.

Cameron was left £300,000 in inheritance following the death of his father in 2011, which fell below the IHT threshold. He received the money from his mother months later.

It comes after Labour leader Jeremy Corbyn suggested that there is an argument for reviewing inheritance tax.

Speaking about Cameron’s £200,000 gift on Sunday’s Andrew Marr show, Corbyn said: “That is within the rules, providing of course the person giving the money lives for more than seven years and obviously we hope she does.

“The issue is one that it does actually reduce the level of inheritance tax that is available for the Exchequer as a whole. Is there a case for looking at inheritance tax rules? Possibly.”

Opposition parties have also been keen to ramp up the arguments for further disclosure. Corbyn is preparing to unveil his own tax returns and the Scottish National Party’s Westminster leader Angus Robertson has called on the Government to publish the tax affairs of all Cabinet ministers.

Robertson said: “David Cameron has serious questions to answer and must provide full disclosure of his cabinet – how many government ministers have benefited from tax havens?

“For a government that says it opposes tax avoidance, it would be totally unacceptable for any of Cameron’s Cabinet to have pocketed themselves.”

Officials have hinted that Chancellor George Osborne may already be inclined to follow suit.

A Treasury source said: “We have been clear that the Chancellor has never had any offshore shareholdings or other interests.

“His income and interests are straightforward and declared publicly: his salary, rental income from a property in London and a shareholding in his father’s firm, Osborne and Little.

“He is always happy to consider ways to ‎offer even more transparency.”

Meanwhile, the Prime Minister is also expected to restate his commitment to corporate penalties for assisting tax evasion.

The Conservatives first unveiled the plans as part of their 2015 manifesto, in which they stated: “We are also making it a crime if companies fail to put in place measures to stop economic crime, such as tax evasion, in their organisations and making sure that the penalties are large enough to punish and deter.”

The FT reports that Cameron will today reiterate the plans, and pledge to put pressure on companies with “inadequate supervisory mechanisms”, as well any businesses that deliberately encourage evasion.

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24th May 201912:17 pm

Comments

There are 5 comments at the moment, we would love to hear your opinion too.

Provided ~ as has David Cameron ~ they declared and paid all and any taxes due on income and gains from any investments held outside the UK, why would it be “totally unacceptable” for any cabinet ministers to have quite legally used them as part of their overall investment strategy?

This whole business is just a case of a few tabloid rags trying to stir up public indignation about things of which most are completely ignorant and the opposition parties trying to make some political capital for their own ends. In David Cameron’s position, I’d instruct my lawyers to look for any libellous/slanderous accusations and press those who’ve made them to issue a public apology and retraction, under threat of legal action if they don’t.

When they were last in power, Labour never made any moves to outlaw PET’s or offshore investments or reduce the IHT Nil Rate Band ~ in fact, on the latter, quite the opposite. Their current moral high handedness is nothing but political opportunism because the PM failed initially to mention that he had in the past benefitted to a relatively modest degree from an offshore investment made by his late father.

This is mainstream IHT planning that has been around for many years, NOT tax avoidance. Leaving an inheritance to your kids up to your Nil Rate Band, with the balance of your estate to your spouse using the spousal exemption is fine, as an future IHT falls on their respective estates. The fact that she has then made a PET gift to DC is also perfectly allowable – HMRC would still get their IHT should she die within 7 years. Why shouldn’t parents be able to make gifts out of taxed income whilst they are alive to their kids, or are we going to have to disclose everything, including that £25 I gave my son Saturday night to go out! I suspect the key point here is that Corbyn and others suspect that the inheritance left to his mother and passed on to him was out of taxed income because of his fathers tax avoidance fund! Which is a different issue to IHT altogether!! This is about tracing the unpaid income tax on far more than the gift made to DC – so over to HMRC – who won’t be able to do it, so the politicians think let’s hit everyone instead by suggesting we challenge tried and tested IHT planning rules.

Bored of the whole thing now. He did nothing illegal nor did he do anything immoral. Is it oral for HMRC to take one penny more off anyone than that person must pay by law?
Let it rest for God’s sake and start worrying about important issues

I don’t suppose it has occurred to those advocating a tightening up of IHT, that the more draconian your tax policy, the more you encourage aggressive planning. It would seem that the Labour party has in the past never grasped this and may with some justification be blamed for offshore investing and other such activities. (Remember Atlee & Wilson)

Cameron is a fool. Before you start taking the high ground you should ensure that you are whiter than white. We in the business know he did nothing illegal and the planning was perfectly legitimate, but the press (who never seem to grasp the details) would prefer to take the easy and sensationalist route – as ever. Again the Government must take some blame for this. How many times have we all complained on this site that they never make a clear distinction between tax avoidance and evasion. Now it has come back to bite him – serves him right.

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